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Q&A with R3: assessing the transformational potential of DLT

Posted: 13 March 2017 | Charley Cooper, Managing Director, R3 | No comments yet

R3’s Managing Director, Charley Cooper, assesses the huge transformational power of DLT, and gives predictions on widescale delivery and investment…

R3, which heads up one of the world’s biggest consortia of financial institutions for DLT research and development, spared us some time with its Managing Director, Charley Cooper, to get some insight into where blockchains and distributed ledgers are taking us in financial services. Can these technologies, for all of their transformational abilities, eventually fill their enormous potential?

In what ways could DLT overhaul banking and payments?

Financial institutions have long been using outdated legacy systems to conduct financial transactions which often leads to overlapped and duplicated data, which is extremely expensive to reconcile. The emergence of distributed ledger technology heralds an opportunity for banks and other institutions to break free from multiple generations of inefficient legacy technology and move to a future where shared records of financial agreements are automatically managed in the cloud without error. One of the many benefits of distributed ledger technology is its ability to provide an immediate record of consensus, or agreement, among parties relevant to a transaction.

How long before we can expect widespread adoption of the technology?

During 2017 we will see the roll out of the ‘1.0’ version of distributed ledger technology as commercial products start being launched. Over the coming years this will be refined and expanded in line with feedback from real-world usage in financial markets.

Is there danger of a slow down in investment in blockchain or DLT technology?

As with any emerging technology, as it matures you will naturally see investment focus on a consolidated group of players who become the industry standard. We believe these will be the firms that represent the interests of the industry as a whole.

Is the hype comparing the disruptive power of blockchain to that of the internet justified?

If the past few years were characterised by blockchain hype, 2017 will be the year of blockchain delivery. Over the next year banks will begin to reap the benefits that have been promised to them since the financial services industry recognised this technology’s potential to deliver efficiency, lower risk, security and cost reductions. For our part, we remain focused on perfecting Corda and looking ahead to our objectives and deliverables for 2017 working together with our members.

Can the security fears surrounding blockchain be overcome, or are they overblown?

Traditional blockchain networks, such as that which underpins bitcoin, are not appropriate for use in wholesale financial markets. Our Corda platform is heavily inspired by and captures the benefits of blockchain systems, but with design choices that make it able to meet the needs of regulated financial institutions. The platform addresses security issues by restricting access to data within an agreement to only those explicitly entitled to it, rather than the entire network.

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